[cowboy joe]

Paperwork has never been one of my favorite things to do but it has a place in keeping the homestead moving in the right direction. The intention has always been to keep track of things like how many eggs the hens lay each day, what I planted & where along with what grew & what didn’t, feed consumption, expenses for the gardens & critters, and livestock production. Some items are tracked in a notebook using pencil & paper while others, like expenses, are tracked on the computer. I also keep a calendar to remind me of special things like fertilizing the blueberry bushes, breeding the rabbits, or placing orders with the state’s coop extension for plants (great prices but I always forget!)

My place is basically a one man show. I expanded this year & found that record keeping took a back seat to everything else with all the extra work. Some of the records are fairly detailed (i.e. # of eggs) while others, such as what was planted & what grew, fall into the ‘my dog ate my homework’ category. I’m wondering if I’m keeping track of the right things or if there is an easier way so I have a few questions:

What to you keep track of?
Do you use your computer to store the information? If so, do you use special software?

 

[Jennifer122102]

Well, I have a record of all the beef in the herd, their sires and dams, any offspring, date of birth, etc... and also the same thing for the pigs. I also have a litter record of all the litters born, how many of each sex were born and weaned, to what mother, the sire, the gestation in days, what the due date was, and any comments I feel are important. My chickens have not started laying, but I will keep records of the eggs. Will be getting some goats in the spring, and will also keep track of their offspring as well as the amount of milk given at each milking.
The one thing I don't keep track of, and I really should, and everyone will think I'm crazy that I don't, is expenses. I figure, they are going to cost me what they cost me if I record it or not. And truthfully, I don't want to see how much money I'm losing. Once we put the pig barn up we are planning on building, and our sow numbers go up, I will start keeping track of my expenses.

Jennifer

 

[Future Farmer]

I keep track of every penny that comes into my pocket or goes out. If I return a bottle for .05, I write it down. If I find .01 on the floor at the store, I write it down. If I spend $2.39 at the post office, I write it down.

Some things that one spends money on aren't worth it. Spending .99 on potato chips from a vending machine twice a week totals up to $102.96 per year. Personally, I'd rather have the $102.96 so I keep track of all my expenses to make sure that I'm not spending money that I could be saving for something I want more. $102.96 would buy a lot of baby chicks from the hatchery, etc.

I keep track on a double-sided piece of paper that I've printed with a chart using Microsoft Excel. It has rows for the date, category of expense (food/groceries or food/treat food) cost, and amount remaining in monthly budget. I live on $400 a week and save the rest. Keeping track of everything keeps me in budget.

I could ramble on forever about good record keeping when it comes to expenses. As far as livestock goes...keep track of the cost of feed and other supplies for your critters. That way you'll know how much your finished product (eggs, meat, etc) cost you compared to what you would pay in the grocery store. If it cost you more to make it than buy it, you might want to switch what you're growing.

Hope this helps.

 

[MorrisonCorner]

Once we put the pig barn up we are planning on building, and our sow numbers go up, I will start keeping track of my expenses.

Jennifer

AAAK Jennifer! Assuming you're going to be doing this as a business your lack of record keeping is going to force you to pay taxes on income twice!

:yeeha: Listen up everyone: keep track of every penny you spend on your operation if you intend to someday/maybe go into business doing what you're doing. Those expenses are "start up costs" and the IRS allows you to amortize them (sort of like depreciation) over the first 5 years of your business to offset profits. Because (duh) you put money into the business up front.

Now.. unless that money fell out of the sky or off a turnip truck you paid taxes on it as income. You spend it building up your hog farm. You (at some future date) start selling pork and find yourself turning a profit. Which the IRS will duly tax. So by "donating" your investment to the business, you're setting yourself up to be taxed on the same income twice!

BAD BAD BAD Very very bad. Never, ever, donate "stuff" to a business. Keep track of your expenses and either claim them or amortize them.

If what I've just said is utterly greek (or geek...) then call your county ag agency. They should have someone on staff, and the government actually produces a whole folder for farm record keeping. Big honking green thing with pre-printed forms. Ask them about "record keeping for farmers" and amortizing farm start up investments.

 

[fordy]

............Just a few additional items in addition to brother Morrison(s) excellent advise ....(1) every dollar that you deposit in your bank has to be accounted ...FOR>>>i.e. for IRS audit purposes.....Also, just remember that each dollar deposited has to have ...a SOURCE ...and a...Destination...
...........SOURCE.....here you should ask yourself.....where did Da bucks come from, a loan from my sister? , a loan from the bank, Income from my business, etc , ....
...........Destination.....business expense , entertainment , madd money , travel , bury my exwife, ....etc. .......fordy....

 

[Barb]

Morrison is right Jennifer. Bad, bad ,bad! Start keeping track NOW. Learn how before it's overwhelming. You will be suprised what you can take off your taxes. Not keeping track of your money is a mistake for anyone, but in a business it will be your downfall. Keep careful track of your money and you will see a lot of holes to be plugged up that are leaking cash. Tighten up NOW. Future farmer has the right idea. When DH and I worked together in an office we bought pop or juice out of the machine during the day. It didn't seem like much at .60 a can and never thought about it until I started keeping careful track of of our money on the computer. It came to $40 a month for the two of us. Yikes!! I found another solution.

Cowboy , we don't use special software right now but I won't rule it out in the future. If I were keeping track of animals, I probably will. Right now crop, pasture, fence, tractor and general ranch expense and income are kept on My Money. I make my own charts for keeping detailed records of household expenses that get generalized in My Money. - groceries for example My garden tracking is my short coming. This year I am using a notebook for that.

 

[Jennifer122102]

MorrisonCorner-
I know! you're right!
As of right now, it isn't a business for us. It is more of a hobby, and of course, a supply of meat. Any money we make selling the piglets, is negated by the cost of the feed.
When the barn goes up, and the swine numbers go up, it will be a business. At that point, every expense/profit will be recorded. I have receipts for the purebred stock I have purchased so far.
Of course, I am clueless when it comes to a lot of business "stuff" so I need to start doing some research...

Jennifer

 

[Jena]

The easiest way for me to keep track of expenses is by having a separate checking account. I pay for everything farm related with that, plus I categorize it once it goes in the computer. All farm income also goes through that same checking account. If some of the income is to go for personal stuff, I write a check from the farm account to the personal one.

I keep track of all cow stuff in my little cow book I get from the feed store every year. Who had who, when, sex, any meds given, etc. Sometimes I keep track of feed daily, but I usually end up letting that go after a time (usually when my pen quits working or gets lost). I do know what I feed more or less over a year's time (last year was 200 bales of hay, so I have 250 for this year, just to be sure). I know that today I will feed the feedlot steers/heifers 16 buckets of feed and three passes of silage! Not too exact, but it's the best I can do.

I keep track of chicken stuff on spread sheets. Average dressed weights, costs of chicks, supplies, feed. I don't know the exact feed for each batch as I always have more than one going at once using the same feed. At the end of the year, I will be able to figure out an overall consumption/conversion.

I keep track of meat sales with my receipt books and also my sales tax forms. I really want to build a spread sheet to track sales by each cut of meat, but I haven't done it yet...sounds like a winter project. I have all the info, just have to get it in workable form.

I also have a spread sheet I use to price the meat from each animal. I have my general prices that usually work, but I need to know if an animal cuts out irregularly and is costing me more/less. It also helps me to know what the ideal weights are for slaughter, etc. Still learning this one.

Records are a pain. Keep the ones you need, not the ones someone else says you need.

Jena

 

[ozarkin'it]

you live on 400$ a week? is that income, or the result of a long time saving? I just wondered, cause boy if I had that much, Id be livin in the lap of luxury.

 

[Future Farmer]

you live on 400$ a week? is that income, or the result of a long time saving? I just wondered, cause boy if I had that much, Id be livin in the lap of luxury.

That's income. It pays $700 per month rent, phone bill, electricity, cooking gas, groceries, vehicle maintenance and repair, etc.

In my high cost-of-living community, it goes pretty quickly, but I pinch where I can, and I'm always looking for new ways not to spend. I don't buy consumer goods (music CD's, electronics, magazines, new clothes) or the like. Just "the basics." I turn off the lights when I'm not using them, etc.

I imagine that if I were to move to an area with a lower cost-of-living, I could probably live on a lot less than $400 per week if I kept my current habits, and even less if I tightened the belt a little more. I am able to save some of that $400 per week now. Not much, but it adds up.

 

[MorrisonCorner]

MorrisonCorner-
As of right now, it isn't a business for us. It is more of a hobby, and of course, a supply of meat. Any money we make selling the piglets, is negated by the cost of the feed.
Jennifer

This is called a "hobby business" and, for the purposes of the IRS, any profits under $400 are not taxable (if memory serves.. make sure). That said... a the IRS frowns rather strongly on deducting the expenses of a "hobby" as "business."

The difference between a hobby and a business are relatively straightforward. A business is in the business of turning a profit. It may have other goals (saving the universe, promoting healthy lifestyles, etc) but at the root is a plan to turn a profit. And the operative word here is Plan.

I can't emphasize enough how important it is to sit down and outline a business plan. A friend of mine does a daylong seminar to beat the business plan into something intuitive and relevant that he calls "business on a bar mat." His theory is that if you can't distill your business plan onto something that will fit on a beer coaster you need to go back and look at your plan, it is too complicated.

Start by defining yourself with a sales slogan. Frelsi Farm uses "ony the finest." When we worked up her business plan she thought that was a nice tag line. Last month she ruthlessly culled her flock, refusing to sell anything but the very finest of her sheep. The rest went to meat. She called me up in some surprise and said "we're living our business plan!" But having the plan made it easier than it has ever been before for her to make hard and fast decisions on who went in the freezer and who didn't. Only the finest are sold off her farm. Everyone else is edible.

A business plan should include an affirmation like "only the finest" which is also your sales slogan. It should include a picture of how you intend to get from where you are to where you're going. And it should include estimates of your available market. This is a living document, so you'll revisit it from time to time, updating it and saving the updates.

Should you ever find yourself sitting in an audit trying to justify 10 miles of electro-net fencing your business plan, mussed, coffee stained, and annotated, is a powerful weapon. It is also a blueprint to success.

Some people succeed by accident. The rest of us need a plan.

"sister Morrison" by the way. The last woman left standing in a long line of hill farmers. See our farm history at http://www.gatewaytovermont.com/summerindex.htm Five generations, one farm: The Farm at Morrison Corner.

 

[cowboy joe]

I have to agree with everyone about tracking expenses. It was real easy in the beginning to think the food I raised would be almost free. Man, was I wrong. Amazing how much cash a few chickens or rabbits can go through if you’re not paying attention. Feed trays, waterers, coops, feed, repairs etc. need to be considered as well as equipment used for general upkeep (i.e. tractor)…and I build / fix my own stuff using ‘recycled’ materials whenever possible. If nothing else, writing it down keeps me honest…it’s hard to ignore a real money pit when you are forced to look at the numbers.

I use Microsoft Money to manage the expense side, a custom package to manage the rabbits, and a notebook for everything else. The custom software tracks the live weight of the rabbits (as long as I remember to put the critters on the scale occasionally) and I can estimate the amount of feed from my expenses but, duh, never thought to record dressed weight of the rabbits, chickens or quail to calculate the feed conversion &/or price per pound to raise. Thanks for the wake up call on that one Jena!

What about produce? I know that the larger farms typically look at tons per acre for the various crops. Anyone with a small operation doing something similar like pounds produced per square foot or pints of fruit per bush? With so much to do in the short growing season, I’m wondering if there is any value in stopping to weigh & record all this information. Just a sanity check to see if I’m going over board here.

MorrisonCorner made reference to some preprinted farm record keeping forms that the county ag office might have. I checked website for the local ag office but I didn’t see anything useful. Anyone know of a site that might have forms / related material electronically? Hoping I might find some useful ideas…if nothing else, something to mull over during the long stretch of winter…sorry, didn’t mean to use that nasty old ‘w’ word.

As to a business plan…well said. If I don’t know where I’m going, how will I know when I get there? For now, the homestead is a way to provide good quality food for my children & I and, while it doesn’t meet the criteria under IRS regs, it is still a business to me, deserving to be run the best I can. Thanks to everyone for their insights.

 

[65284]

[QUOTE=fordy........ 1) every dollar that you deposit in your bank has to be accounted ...FOR>>>i.e. for IRS audit purposes.....

I think that is a key phrase.

I know there are folks who will sell for less.......if the buyer pays in CASH, especially at farmers markets, and swaps, where the buyer and seller don't know each other. I had long suspected that most or all of the cash sales, by some folks, don't get written down anywhere. Many years ago I asked a guy I had know for a long time about it and his reply was, " you would have to be pretty stupid to get caught". For example he rotated picking up most of his feed once a month at 1 of 3 mills each about 50 miles away, paid cash, and the sales ticket was to John Jones at one, Sam Smith at another, Bob Brown at the another etc. But he also had a small amount delivered to the farm by a local dealer, paid for by check. Bought most of his fuel at whatever service station was the cheapest, hauled most that was for farm use home in a 55 gallon barrel, and paid for it with cash, but also had a tank on a stand at home which he had filled once a year, paid for by check. He paid cash for a lot of their, entertainment, vacations, eating out, grocery, clothing items, small repair parts, about anything he could pick up at the sellers and didn't have to give his real name or address, but again paid for some items with a check. Never, never, put much of the cash in the bank, carried large amounts, or made large cash purchases, and never owned a credit card. He also said he kept a very detailed set of books, put down everything that was delivered to his place, or he accepted or wrote a check for, and some the cash. The same kind stock was never all together in the same pasture, pen, or building and very few where they could bee seen from the road, making it very hard for the casual passerby to tell how many of what he had. This guy sold at a lot of farmers markets, swaps. But he also sold eggs, fryers, layers, sides of beef, butcher hogs, cured hams, lambs, garden and orchard produce, from his farm. And did whatever it took to make sure there no dissatisfied customers to complain to anyone. He showed enough expense to justify the income he reported but ALWAYS showed a profit. I never knew and didn't ask how much he made but I imagine it was very healthy sum. And most importantly he told very few people, and only those he could trust to keep their mouths shut, I am only repeating it now because he died a couple of years ago. I suppose if the IRS had been suspicious they would have nailed him, but he tried very hard to give them nothing to be suspicious about

 

[Guest]

It seems that some of you have much bigger operations than the cowboy. Bigger operations calls for definate, detailed record keeping. I know that even in small operations records should be kept in detail due to taxes. Records of breeding, due dates, etc. We had chickens for awhile that were kept in a pen, which called for all feed being purchased. All at once I had more eggs than I could possibly use up. I ended up selling the eggs too cheap, so as a result the hens weren't paying for the cost of feeding. How did I know this? By keeping records. We also keep careful records on each cow. I would say don't get so hung up on keeping records that that's all you can think about, but definately keep them. It'll pay in the long run.

 

[Guest]

As far as record-keeping, instead of a notebook, have you tried using a PDA? That way, anytime you need to you can synch it up with your desktop computer. I don't know about agricultural PDA software per se, but you can certainly customize programs like FileMaker and SmartListToGo. If you're on a PC (as opposed to a Mac), it is easier to find software that will work on both the PDA and the desktop (so if you have to type in a lot of stuff you will be more comfortable on the larger keyboard). Also, on the PDA you can set multile alarm tones for "appointments" to check on the chickens or whatever while you're out and about.

One problem with doing cash business is that it can hurt you when you go to apply for loans--you may be doing a great business, but you can't prove it to the bank, so no loan. Same with buying a business or rental property--ask to see the tax records to prove they're making what they say they are before making an offer.

Another is that it is not unheard of for say craft and other shows to employ people to see if you don't charge sales tax, for example. You get caught, not only will you be reported, you won't be welcome at that show anymore.

 

[Janon]

One problem with doing cash business is that it can hurt you when you go to apply for loans--you may be doing a great business, but you can't prove it to the bank, so no loan. Same with buying a business or rental property--ask to see the tax records to prove they're making what they say they are before making an offer.

Not always true. Some bankers assume that those who are self-employed are not reporting their entire income, especially if they have a decent amount of money in the bank. I recently applied for a loan... and the banker looked me in the eye while reviewing my tax statements and said "I know there is more than whats here", and was approved. My tax records are legit... and I didn't take the loan, but the bank was still willing to lend the money. I never mentioned that my tax records are legitimate to the banker, because he never asked if they were... he just assumed they were bogus.

cheers,

 

[Shrek]

Using Quicken I track overhead, income, production, profits, losses, projections, surpluses and tax liabilities. Using Wordpad I chronologically journalize my operations and business plan milestones.

 

[Guest]

"Not always true. Some bankers assume that those who are self-employed are not reporting their entire income, especially if they have a decent amount of money in the bank."

But most businesses/people needing loans don't have a decent amount of money in the bank (that's why they need the loan). If you're going through a local, independent bank that you have banked at for years, you might still get the loan. But not necessarily if you're looking at other banks. Without adequate records, usually tax records (bank deposits can easily be moved or spent) over a few years, the bank is taking much more of a risk with a self-employed person, because they aren't sure how much is going in, or out for that matter.

Not saying you can't get loans--but you most likely will not be paying the lowest rate you can, or you may have to go through other 3rd party lenders that are willing to take the risk (for a much higher interest rate of course). Or do what most small businesses have to do, which is essentially mortgage your home, something you don't want to do if you have a viable business.

 

[Barb]

Cowboy Joe, Don't have time to look but large univerities sometimes have sites in the Ag programs for down loading forms. Try a search in a big university in your state. I know the North Dakota State University had some for downloading thru the Ag Experimental Research Station a couple of years ago. They also had some programs to buy I think.

 

[poorme]

"Farm account and Record Books," which track expenses, reciepts, etc are pretty easy to find, but anyone find good <cheap> production record books for beef/swine production? To track vaccinations, feed intake, etc. etc.